BYD Predicts Smaller Third-Quarter Profit on Weak Sales

A BYD Co. logo is displayed in the foyer of the company's museum in Shenzhen. Photographer: Forbes Conrad/Bloomberg

Aug. 26 (Bloomberg) -- BYD Co., the Chinese automaker that
counts Warren Buffett’s Berkshire Hathaway Inc. as an investor,
slumped the most since August 2011 in Hong Kong trading after
predicting the smallest quarterly profit in a year.

BYD plummeted 12 percent to close at HK$28.45 in Hong Kong,
the biggest decline since Aug. 23, 2011, cutting its gain this
year to 22 percent. The benchmark Hang Seng Index rose 0.65
percent.

Net income for the three months through September may be 3
million yuan ($490,000) to 50 million yuan, according to
Bloomberg calculations using BYD’s reported data. The Shenzhen,
China-based company, which also makes batteries, mobile phones
and solar panels, said earnings will be hurt by weaker vehicle
sales and handset orders.

“The earnings-recovery path looks bumpy,” Ole Hui, a Hong
Kong-based analyst at Mizuho Securities Asia, said of BYD in a
note to clients today. “With the weak third quarter guidance,
we expect a delay in recovery.”

At the low end of the forecast range, BYD’s profit would be
its smallest since a loss in the second quarter last year,
according to data compiled by Bloomberg. Quarterly earnings were
derived by subtracting the company’s six-month figures from its
nine-month projection.

“The automotive industry is in its weak season in the
third quarter,” BYD said in a statement to the Shenzhen stock
exchange. Profitability at BYD’s smartphone business is under
pressure because of increasing competition in the industry, and
solar losses remain a drag on results even though they’re
narrowing, the company said.

Electric Buses

BYD, whose market value has more than doubled in the past
12 months, said yesterday its first-half profit surged 26-fold
to 427 million yuan amid rising auto sales, strong orders for
its mobile-phone handset business and a narrower loss at its
photovoltaic business.

The company plans to increase overseas sales of its
electric buses as it completes a three-year restructuring.
Founder Wang Chuanfu said BYD will remain in the solar-panel,
battery and auto businesses as part of the company’s vision to
create a “zero-carbon and zero-emission eco-environmental
system.”

MidAmerican Energy Holdings Co., a unit of Buffett’s
Berkshire Hathaway, took a 9.9 percent stake in BYD in 2009,
paying HK$8 apiece for 225 million new shares.